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Bitcoin’s price has shot up more than five-fold since late 2020.
Bitcoin has been taking a breather for the past several weeks, but don’t let that take attention away from its long-term performance. In the past five years, the leading cryptocurrency has soared 409% (as of Nov. 26).
Investors might be inclined to take a chance on Bitcoin on the recent dip. But where will this digital asset be in 2030?
Expect lower returns
Bitcoin has had a monster rise over the past decade. However, investors shouldn’t extrapolate those gains going forward. The reasonable outlook is to expect lower returns, since the asset is maturing.
That being said, it wouldn’t be surprising to see Bitcoin’s price triple by the end of 2030. To do this, it would need to generate a robust compound annual rate of return of 25%. This would surely outperform the stock market by a wide margin.
Bitcoin’s scarcity is key
Bitcoin’s best trait is that it has a hard supply cap of 21 million units. This scarcity makes it a compelling asset to own, particularly as fiat currencies, such as the U.S. dollar, constantly lose purchasing power over time.
The current regulatory backdrop works to Bitcoin’s benefit as well, making it easier for companies to build related products and services and for investors to access the crypto.
Bitcoin currently trades at around $88,000. In five years, it’s not out of reach for it to trade around the $270,000 mark, if the bull run continues. As always, keep your risk tolerance in mind.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
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